Indigo explores new horizons in pursuit of business prudence

Airline optimising on its A320 fleet and finding underserved routes for growth.

Having established its dominance in the Indian skies, InterGlobe Aviation-owned budget carrier Indigo, is spreading its wings for new international destinations. It has already clocked the highest number of international flights taken out by an Indian carrier, ahead of Tata Group’s Air India. In the post-earning conference call the airline announced plans to take the share of international routes in its portfolio to 30 per cent by end-FY24, from the present 23 per cent. However, more than this expansion plan, what has caught public attention is its unorthodox choice of destinations and therein lies its sharp business bet.

Indigo, in June, announced direct flights to six new destinations including Azerbaijan, Indonesia, Kenya, Uzbekistan, Kazakhstan and Georgia, taking its total international markets to 32, up from 26 till the June quarter, alongside its 78 domestic destinations. Market observers are impressed by the strategy to go into these underserved routes giving the airline, which already has a lion share (60 per cent) of the domestic market, enough elbow room for growth. 

“We must acknowledge Indigo for identifying destinations that have immense business potential- present and future. The opening of these new routes is a very well-calculated risk for the airline,” underscored Devesh Agarwal, chief analyst at Bangalore Aviation. 

Most see business-related travel, a large Indian diaspora and the growing appetite for international travel driving the service to these otherwise off-beat destinations. IndiGo stands to capitalise on the opportunity it has been quick to recognise, they say.

IndiGo has in the past serviced routes such as Dubai, Doha Sharjah and other usual suspects.  But aviation experts admit that there are limitations to expanding on such popular routes, which are already crowded by a host of Middle Eastern carriers and also its local rival - Air India. 

While some argued that IndiGo’s new explorations are limited by its fleet of Airbus 320 aircraft, which cannot do flights longer than six hours, others like Mark Martin, chief executive of Martin Consulting are convinced that using Airbus 320s on these destinations is a “smart move” to enable maximum fleet optimisation. Additionally, the airline aims to stick to its low-cost model as it seeks more international business. 

“There is a greater number of passengers in the bottom end of the market than in the top end and IndiGo realises that. IndiGo’s recent additions show it's finally courting the potential for flights to Central Asia and the Caucasus, which has existed for well over ten years. It’s also realising the potential of transiting flyers from these regions via/through Delhi/Mumbai world onward to Asia and inbound tourism potential from these regions,” underscored Rishi Jain, CEO, Jain Aviation Consultants and fellow at the India Central Asia Foundation.

“As far as the long routes are concerned, the airline is not betting big on that side and testing viability on its two Boeing 777 aircraft (which it wet-leased from Turkish Airlines),” observed Shravan Shetty, aviation expert at Primus Partners. 

In a recent interview with DH, Indigo's head of network planning and revenue management Abhijit Dasgupta revealed that the airline’s primary focus is the 6-6.5 hour radius market, however, it is awaiting delivery of A321XLR aircraft from Airbus, which will allow the airline fly longer distances (an additional 1.5-2 hours) into Europe, Southeast Asia and Northeast Asia. 

Alternately, the airline is also looking to expand to destinations in the United States and other parts of the world via code-share agreements. It is to be noted that the airline already serves over 30 additional destinations through a code-share agreement with Turkish Airlines. 

“Outside of Central Asia and the Caucasus, numerous more such markets exist. I would not be surprised to see Indigo soon launching destinations such as Amman Jordan, Manilla Philippines and Phnom Penh Cambodia. Some of these markets could provide lucrative feed for Indigo’s proposed future wide-body operations,” said Jain adding that Air India could also be targeting these regions soon with flights.